Zynga IPO set for Dec. 15 at $10B valuation?

Social game maker Zynga is reportedly planning to go public on Dec. 15 at a valuation of $10 billion, according to a report by Reuters.

The valuation is much lower than the $15 billion to $20 billion that was rumored as Zynga’s expected valuation when it filed papers to go public on July 1. Reuters cited two unnamed sources close to the process.

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The IPO will generate about $900 million in proceeds at a price of $8 to $10 a share and an initial float of 10 percent. Zynga declined to comment. Two weeks ago, the company said a third-party analysis had valued Zynga at $14.05 billion, which is about the same as Activision Blizzard, the largest video game publisher, with four times Zynga’s revenues.

Zynga was founded in 2007 and has been riding the wave of Facebook’s growth and the popularity of lightweight social games, which are free to play. In those games, such as FarmVille and CityVille, users play for free and pay real money for virtual goods.

“I think they must have realized that getting $14 billion or higher would be a tough thing in this market. We were wondering how they would pull that off,” Sterne Agee analyst Arvind Bhatia, told Reuters.

Zynga has made money this year, but its growth slowed in the September quarter. Zynga has already waited a long time for its IPO, but the market window hasn’t been right. Companies such as Groupon and Angie’s List have gone public, but the market has been volatile due to uncertainty in Europe.

Zynga’s top executives will go on an investor road show next week, according to Reuters. Another source told Reuters that CEO Mark Pincus will not sell shares in the offering, nor will Kleiner Perkins Caufield & Byers.

Morgan Stanley and Goldman Sachs are lead bookrunners on the deal, with Bank of America Merrill Lynch, Barclays Capital, JP Morgan and Allen & Company also participating. Zynga reported net income of $30.7 million on revenues of $828.9 million in the nine months ended Sept. 30.